Correlation Between Qtum and NEXO
Can any of the company-specific risk be diversified away by investing in both Qtum and NEXO at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Qtum and NEXO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qtum and NEXO, you can compare the effects of market volatilities on Qtum and NEXO and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Qtum with a short position of NEXO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qtum and NEXO.
Diversification Opportunities for Qtum and NEXO
Almost no diversification
The 3 months correlation between Qtum and NEXO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Qtum and NEXO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXO and Qtum is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Qtum are associated (or correlated) with NEXO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXO has no effect on the direction of Qtum i.e., Qtum and NEXO go up and down completely randomly.
Pair Corralation between Qtum and NEXO
Assuming the 90 days trading horizon Qtum is expected to generate 1.1 times more return on investment than NEXO. However, Qtum is 1.1 times more volatile than NEXO. It trades about 0.01 of its potential returns per unit of risk. NEXO is currently generating about 0.0 per unit of risk. If you would invest 612.00 in Qtum on January 16, 2024 and sell it today you would lose (203.00) from holding Qtum or give up 33.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qtum vs. NEXO
Performance |
| Timeline |
| Qtum |
| NEXO |
Qtum and NEXO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qtum and NEXO
The main advantage of trading using opposite Qtum and NEXO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qtum position performs unexpectedly, NEXO can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NEXO will offset losses from the drop in NEXO's long position.The idea behind Qtum and NEXO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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